The Truth About Cars » Chery The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Thu, 17 Jul 2014 13:26:26 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » Chery China’s Qoros Earns 5-Star Crash Rating in Euro NCAP Testing Fri, 27 Sep 2013 13:26:06 +0000

Click here to view the embedded video.

Automotive startup Qoros Auto Company has an interesting business model. Backed with the manufacturing know how of China’s Chery corporation, and the funds of the Israel Corp. holding company, controlled by the Israeli Ofer family, Qoros is designing cars in Europe to be sold in Europe, but built in China.


Of course it’s planning to sell cars in China as well but Qoros is hoping that success in Europe will allow it to be the first Chinese car company to compete well with the Europeans in its home market. Chinese consumers, like many consumers worldwide, do not have the highest regard for the perceived quality of Chinese products. To succeed on the continent, though, Qoros is going to have to overcome the image of Chinese cars in Europe, an image tainted with some of the worst crash test results ever achieved in European testing. A 2010 Landwind CV9 minivan made by Jiangling Motors Corp. got only two stars in Euro NCAP testing. That was actually an improvement over the Landwind X6 SUV whose 2005 crash testing was described by the German lab that performed the tests as “catastrophic.” The video of those catastrophic crash tests  (seen below) was widely circulated. It appears that Qoros must have done their homework because earlier this week the compact Qoros Sedan 3 earned a five-star crash test score from Euro NCAP, the highest possible score.

“The small family car showed good overall protection with high scores in all four areas of assessment and is a significant step up from previous Chinese exports,” Euro NCAP said.

Roger Malkusson, who is in charge of vehicle development for Qoros, said the score would help the auto maker distinguish itself from Chinese rivals when the Sedan 3, Qoros’ first model, goes on sale in a few weeks.

“It is important for us to show we are different,” Mr. Malkusson said in a phone interview with the Wall Street Journal. “We want to show that we are a high-quality brand…that we are really unique.”

Joining Mr. Malkussan, who came from the currently defunct Saab Automobile AB, at Qoros is Gerd Volker Hildebrand, who helped launch the Mini brand for BMW AG. They’ve hired veterans of Jaguar Land Rover and Volkswagen to fill out their executive ranks, and they’ve chosen respected European suppliers like Magna Steyr and AVL, both based in Austria, to provide components.

The Qoros Sedan 3 is being assembled at a completely new factory near the Shanghai coast and it will initially go on sale in China and in Eastern Europe before expanding into the rest of the EU. The Sedan 3 is planned to be the first of seven all new vehicles to be made by Qoros, and it is expected to be priced at around €20,000 ($26,946) in Europe.

Click here to view the embedded video.

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Chinese Car Dealers Report Inventories Remain High Wed, 31 Jul 2013 10:30:02 +0000 0405_China_Auto_630x420

According the the China Automobile Dealers Association, despite efforts by car makers to reduce inventories, Chinese domestic brand dealers still had 49 days worth of supply in June, a figure that would be considered decent in North America, where two months is the norm. But it’s a matter of concern in China, where normal dealer inventories are 24 to 36 days. That figure is an improvement over the 61 days of supply at the end of May.

Chery had the highest inventory of Chinese brands, 95 days, and BAIC was second worst at 78 days. Car sales growth in China has slowed in recent months concurrent with a slowing of overall economic activity in China.

Import dealers had a 56-day supply, a solid improvement from 80 days a month earlier.

Inventories for dealers of foreign brands assembled in China went up slightly to 44 days, from 42. CADA said that Chinese dealers for both foreign and domestic brands have been lowering prices to trim those inventories and meet sales targets.

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Detroit Jury Awards Millions In Malcolm Bricklin Fraud Suit Regarding Chery/Qoros JV Mon, 29 Jul 2013 21:54:59 +0000 Visionary-Vehicles-dealership-resized

Visionary Vehicles’ envisioned dealership

Malcolm Bricklin’s company, V Cars (formerly Visionary Vehicles), was awarded $2 million by a Detroit jury in U.S. District court. The lawsuit was filed after Bricklin’s failed effort to set up a joint venture with Chery to produce Chinese made cars for the North American market. The jury ruled that KCA Engineering, a company founded by former Visionary executive Dennis Gore while he was still an employee of Bricklin’s startup, had committed fraud as well as a number of other misdeeds. When Gore was first hired by Visionary, Bricklin said it was because of his expertise with Asian car manufacturers.

In the suit, V Cars LLC v. KCA Engineering LLC, U.S. District Court, Eastern District of Michigan, Southern Division, No. 2:11-cv-12805, Bricklin accused Gore of using V Car’s proprietary information to assist Chery in launching the Qoros Automobile Co, in a joint venture with the Israel Corp holding company, controlled by the Ofer family.


Malcolm Bricklin and Chery CEO Yin Tongyao in cheerier days

Chery and Visionary Vehicles entered into a joint venture in December 2004. Weeks later Bricklin staged a guerrilla press conference in the lobby of Cobo Hall during the 2005 NAIAS media preview to hype the project, predicting that they’d be selling 150,000 Chinese cars in the United States by 2007. The JV was cancelled in 2006.


The suit against KCA is just one of a number of lawsuits filed by Bricklin in an assortment of countries to try collect damages over his soured deal with Chery. Litigation is continuing in V Cars LLC v. Chery Automobile Co et al., which seeks over a billion dollars in damages and lost projected earnings for what Bricklin claims was racketeering on the part of Chery.

In a 2009 interview with Car & Driver, Bricklin didn’t hold back on what he thought of Chery:

When Chery went from the bastard child of China to its favored son—because of what we were doing—and companies like Chrysler began to court them, they decided to see if they could screw me. Thought they would see if they could take it all back, and they did, and we’re suing them for $14 billion. China has the ability, they have the talent, they had the opportunity, but they don’t yet understand you can’t do business in the rest of the world the way they do business in China. Knowing what I know now, I wouldn’t have gone anywhere near them.

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EXCLUSIVE: Bernstein Research Literally Dissects Chinese Cars, Auto Industry In 200-Page Report Fri, 22 Feb 2013 18:20:16 +0000

Max Warburton and his team. Warburton, of Bernstein Research, assembled a team to interview over 40 auto executives in China (both Chinese and foreign-born) and even bought two Chinese vehicles from Geely and Great Wall. Warburton had them shipped to Europe, where they were taken to a test track, driven extensively and then taken apart by engineers and automotive consultants. And it was far from pretty.

Warburton and his gang have assembled an epic 200-plus page report that is one part primer on product development, one part spotter’s guide to the Chinese domestic car industry and one part road test feature that rivals anything out of the buff books or Consumer Reports. It is dense, fact-filled and will take a few solid hours to read and absorb.

The first 64 pages are devoted to the ins-and-outs of the Chinese auto industry. Warburton deftly takes us through the various players and their broken-English monikers (Great Wall, Chery, Brilliance and the like) along with thorough dossiers on each one. Who is in bed with whom, which JVs are successful and even interviews with executives where they are asked to praise and criticize the various Chinese auto makers. The consensus seems to be that SAIC is miles ahead of everyone else – thanks mostly to their collaboration with GM.

One OEM executive who had recently left GM China argued that part of the problem was that the international OEMs do not take their responsibilities to the joint ventures seriously — GM being the only exception. What does it take to ensure a joint venture is successful and benefits the Chinese side?

I was part of GM when they put a lot of effort into China…I used to see Rick Wagoner (CEO) in China almost every month…he really spent a lot of time here, especially with the politicians…and they spent millions in the Chinese universities to be good citizens. They’ve built a styling studio, they’ve built a RMB1.6 billion proving ground, they’ve sent their best products to China. They’ve built the engineering function — they went from 400 engineers in 2005 to 2,000 in 2008, now they’re at 2,500. They have a 100% capable engineering center. They are really serious. You need to be serious here. But a lot of [foreign] OEMs are not.

Also in the good books is Great Wall. Along with advanced engineering prowess, Great Wall pays their supplies and vendors on time – apparently, a major issue among the design consultancies and foreign-born experts that, according to Warburton, are responsible for the vast majority of what China’s auto industry does right.

The individuals that Warburton interivews from the engineering firms tend to be extremely bearish on the Chinese auto industry. Managers are largely drawn from the Politburo, engineers are portrayed as incompetent and cutting corners is said to be a way of life. According to one executive, “…a mistake is only a mistake if you are found out.” One auto insider believes that most Chinese sedans of the recent era have been reverse engineered copies of the Toyota Corolla. They key dimensions and “hard points” are identical, and he believes that frankly, the Chinese auto industry is not yet capable of engineering its own car from scratch. Furthermore, they are obsessed with matching VW shot for shot, but their thrifty nature and impatience inevitably hampers their success.

They are all obsessed with matching VW — but we would generally advocate that they would be better going for a twist beam rear suspension with three components, with little to go wrong — rather than a multi-link with 20 that they will then screw up putting into production…to emulate VW or Ford they need to control tolerances within an incredibly tight range — and they end up a long way out.

Along the way, we find out that while Toyota and VW spend in the neighborhood of close to 10 billion dollars on R&D annually, Chinese companies spend around $100 million, largely a combination of stinginess and not having to do so thanks to reverse engineering existing technology. A high-speed drive across a 22-mile bridge illustrates tangible results of this corner cutting.

Later that week, we meet Frank Zhao, Geely’s head of R&D. We mention the Geely EC8′s apparent lack of crosswind stability and ask how much time the car had spent in the wind tunnel during its development. Mr. Zhao is honest, and admits that Geely doesn’t have a wind tunnel (there are only two in China), and that due to alimited product development budget, he needs to choose where to spend his money. Mr. Zhao explains that Geely made the decision not to hone the EC8 in a wind tunnel, because most customers don’t leave cities and very few drive at high speeds on bridges. The money was instead spent on electronic features (satellite navigation, etc.) and solid basic engineering (and we concur, as the body seemed rigid, and noise, vibration and harshness [NVH] were well controlled).
A ride in an EC8 encapsulates where Chinese automobile development is right now. The basics are okay. The cars are adequate. But they are not world-class, in our opinion.

Around page 71, the fun begins, as the team procures, imports and test drives two Chinese cars, the Geely EC7 and the Great Wall H5. Rather than spoil the results for you, I encourage you all to pay close attention to the teardown portion, for an utterly fascinating look at the ins and outs of a Chinese car. There are certain elements that were highly-praised; the Geely’s body-side panel, stamped from one piece, was described as “deeply impressive” and “beautiful” by European engineering consultants. But the engineers and test drives found manifold faults with the car; shabby spot welds, malfunctioning HVAC systems, corroding parts and body panels after just a few hundred kilometers. Ben Oliver, one of the UK’s best auto journalists, was brought in to give his perspective. He declared the Great Wall to be dreadful.

The report seems to conclude that it will take a minimum of a decade before the Chinese are ready to field a competitive product. They are not functioning anywhere close to as competently as a Western auto maker, and the foreign hired help brought in to make them succeed are quickly getting frustrated with the lack of progress and poor attitude.

But Warburton and his team, upon inspecting the Great Wall H6 (successor to the H5) come away impressed with the progress that’s been made. The body-on-frame construction, thirsty Mitsubishi engine and crude engineering appear to have been jettisoned in favor of a much safer and more efficient crossover. Warburton notes that this kind of progress would take a few product cycles at traditional OEMs in past eras and comes away impressed. ” It’s clearly a significant leap forward versus the H5,” says Warburton. “If this is what Great Wall can achieve in 15 months…then it may be building a Bugatti Veyron rival by 2014.”

EDIT: Bernstein requested that the report be removed. The report was generously provided to TTAC but it was not meant for mass dissemination. We apologize for the misunderstanding.

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The Chinese Are Coming! Seriously Now Mon, 18 Feb 2013 18:56:29 +0000

Qoros 3 Sedan

At the Geneva auto show, the long awaited Chinese attack on the embattled European auto market will finally get started in earnest – with the help of German and Austrian engineers, and money from Israel. Qoros is a joint venture partnership between China’s Chery and the Israel Corporation. Qoros wants to be to Chery what Lexus is to Toyota and Acura to Honda. It also wants to be the key that unlocks foreign volume markets.


The names on the doors of the executive suite at Qoros sound like a who’s who of European automotive management: A former Executive Vice President of Volkswagen of America, Volker Steinwascher, is Vice Chairman. Gert Hilderbrand. before Chief Designer of MINI at BMW, is head of design. A former Chief Engineer of BMW, Klaus Schmidt, is in charge of engineering. Peter Matkin, formerly Chief Engineer at Jaguar Land Rover, is in charge of the vehicle program.

Qoros 3 Sedan

The cars look a bit more conservative that the cow designs Hildebrandt showed two years ago.

First will be the Qoros 3 Sedan,due to be launched in China in the second half of 2013, with first European sales following later in the year. Launches of further Qoros models are promised at six month intervals.

Qoros 3 Estate Concept

“The car will attack the 6,000 euro more expensive VW Jetta,” reports Germany’s BILD Zeitung. The paper entertains its readers with the Landwind crashs from 2005, but also reports that the engines come from AVL in Austria, the engineering is from Magna Steyr, “and many parts come from Germany.”

Speaking of safety, Qoros says it “aims to achieve top scores on both European and Chinese crash tests for all its models.”

Qoros 3 Cross Hybrid Concept

Chery is China’s largest independent automaker. In a stagnant Chinese market, independents are feeling the pinch by joint ventures between large multinationals and state-owned Chinese companies. Independents seek their salvation in exports, but, as we reported from the Global Automotive Forum in Chengdu, “exports usually come from backwards companies,” as Donfeng’s chairman Zhu referred to China’s second and third tier car companies. Chery wants to break that mold, exporting cars one can be proud of. To sell and to buy.


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Chinese Brand Binge Claims First Victim Mon, 19 Nov 2012 14:57:51 +0000

A year ago, we wrote about China’s suicidal brand binge:

“If Chinese carmakers will do what they say – and they appear to be utterly committed – then China will soon wallow in a sea of car brands nobody has ever heard of, and nobody will ever be able to remember. Sometimes, it feels as if it is the long-term goal to give each and every of the 1.3 billion Chinese his or her individual car brand.”

A year later, the brand disease claims its first victim, and it is Chery.

A report by Reuters says that Chery barely made money during the heydays of 2009 and 2010, and “would have been deep in the red if it were not for the 633 million yuan and 1.12 billion yuan in subsidies it received in those two years.” Chery is not dead yet, but it would be without government life support.

Chery’s problem: Instead of building on the success.of its hit QQ, says Reuters, Chery “rolled out dozens of new models with little differentiation and even created two additional brands, Riich and Rely, which never caught on.” In the meantime, domestic rivals like Great Wall and Geely, which focus on fewer models and did not get infected by brand mania, thrive.

In September, the CEO of Dongfeng, one of China’s largest automakers, said that last year’s brand binge was misguided, “irrational, incompetent, and immature.” He also recommended that China’s planners should “withhold resources,” and starve the afflicted companies to death. Chery would be one of the first to be euthanized.

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JLR Approved To Make Cars In China. Or Maybe Not Fri, 21 Sep 2012 18:45:42 +0000 Being at odds with its number one trading partner Japan at the moment, China shows that it doesn’t have to be the big bully, and that it can make nice with other former enemies if it feels like it.  China gave a surprising regulatory nod to a joint venture between Tata-owned Jaguar Land Rover and Chery. If you think they were long married, then you are right. They said yes a while ago. However,  in China, a joint venture is not really a joint venture unless the National Development and Reform Commission (and sundry other bureaucracies) have given their nod, and did put their chop on the contract.

Reuters says that deal will “help raise the profile of Chery, a mass volume player aspiring to gain access to the lucrative upscale segment dominated by foreign brands.

It also marks Jaguar Land Rover’s latest effort to expand its appeal in the world’s largest auto market, where luxury sedans and SUVs remain in hot demand even as the overall car market cools.”

Reuters’  reporter Fang Yan has seen these deals before and asked Chery whether they had actually seen the NDRC approval, whereupon a Chery spokesman said: “We heard the project has been approved, but we have yet to receive the official notice from NDRC.”  Let’s hope the letter will arrive.

The deal is surprising insofar as the Chinese government has been discouraging JVs with foreign carmakers all this year (while not explicitly ruling them out) in an attempt to, well, discourage overcapacity. Even more problematic, Chery is independent and not one of the big state owned enterprises. But you never know.

If the NDRC letter arrives, then the venture will be based in Changshu near Shanghai and will be able to produce 130,000 units a year. The plant will make in-demand Land Rover SUVs initially, followed by Jaguars later.

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Chery Seeks Permission From Big Brother For Jaguar Land Rover Joint Venture Tue, 15 May 2012 16:44:45 +0000

Chery has asked the Chinese government for its blessing regarding a joint venture with Jaguar Land Rover worth $1.9 billion.

The proposal calls for a new plant in the Jiangsu province that would produce as many as 130,000 cars per year. Chinese government officials will have to perform an environmental assessment before the plant goes ahead. Approval from the National Development and Reform Commission, China’s main governmental economic body, will also be required

Chery recently saw plans for a tie-up with Subaru go belly-up, but an agreement with JLR combined with China’s appetite for luxury vehicles and SUVs should help take the sting out. Jaguar will need to help make some of its product more attractive for China – a V6 engine has been cited as a must-have for the XJ due to taxation reasons.

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Subaru Shut Out Of China, Pledges Allegiance To The Flag Thu, 10 May 2012 17:52:36 +0000

With a planned Chinese joint-venture between Chery and Subaru now really, honestly dead in the water, Subaru will look to the United States for sales growth, while importing cars to China for the next few years.

As part of its America-focused future, Subaru will expand its sales goal to 380,000 units per year in the United States by the end of the 2016 fiscal year. Subaru sold 264,198 cars in American in 2011. Production facilities in both Japan and the United States may also be expanded as part of the plan.

With the collapse of the Chery deal, Subaru will be forced to import vehicles to China, and have their cars subject to a 25 percent import duty. Subaru said that Chinese manufacturing would be difficult to establish until the end of their 5-year plan in 2016, but that stipulation likely means that the door hasn’t been completely shut on Chinese Subaru production at a future date.

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Chinese Government Denies Subaru Joint Venture. Again? Thu, 10 May 2012 11:38:36 +0000

Just-Auto issued a breathless press release with the hot news that the nasty Chinese government has said no to a joint venture between Japan’s Subaru and China’s Chery. If this sounds like deja vu to you, then you are an ace analyst. Send your CV to just-auto.

The story is ancient news. Last October, Fuji Heavy was told its application was denied because Subaru “is an affiliate of Toyota Motor Corp.” Toyota already has two joint ventures in China, and a company can’t have more. The argument sounded a bit belabored. However, two months later, the Chinese government issued an edict that discouraged new joint ventures between Chinese and foreign carmakers in a market that battles with overcapacity: “Sorry, we are closed!”

Just-auto fell victim to a press release by Subaru, which announced slight adjustments to Fuji Heavy’s “Motion-V” 5 year business plan. One of the changes is a belated realization that “it seems difficult to establish local production in China.” Therefore, “FHI will make a shift from local production scheme to car export scheme.” Except that there never was a local production scheme. Subaru will continue importing cars to China. Good luck with that.

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Jaguar Land Rover Coming To China. Honestly Now Wed, 21 Mar 2012 12:57:33 +0000

After years and years and years of rumors and premature announcements, Jaguar Land Rover (JLR) has finally, honestly, cross your heart and swear to fry, “finalized a joint venture agreement with Chery Automobile Co to manufacture and sell vehicles in China,” Reuters reports.

The never-ending story however is just beginning. As Reuters rightly points out, “JLR, owned by India’s Tata Motors (TAMO.NS), and Chery are seeking regulatory approval for the 17.5 billion yuan ($2.78 billion) venture in eastern China.”

That regulatory approval never was easy, and now it is harder than it used to be. The fact that Chery is an independent maker and (at least not officially) tied to some government, won’t make the matter easier.

Chery has some experience with that. Previously, the maker of QQs had tried to forge a joint venture agreement with Japan’s Subaru. That had been turned down. Fuji Heavy was told the application was denied because Subaru “is an affiliate of Toyota Motor Corp.” Toyota already has two joint ventures in China, and a company can’t have more than two. Or so the tortured reasoning went.

Knowing this, JLR and Chery wisely put a Chinese research and development facility into their business plan. China has enough carmaking capacity. China wants more know-how.

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The Chery Eastar Parade Car From China Fri, 30 Dec 2011 15:59:56 +0000 Hongqi is the most famous brand in China when it comes to parade cars. In 2008 however, Chery tried to change that with help from the Chinese army and some astronauts. The Eastar parade car debuted in April 2008 and was used for a very special military parade. Or more like a parade of parades.

The Eastar parade car was stretched by 20 centimeters in the middle, the roof went off. After a handle bar was installed behind the front seats, the car was ready for duty. The project was initiated by the People’s Liberation Army’s General Armament Department. This department was responsible, among many other duties, for taking care of China’s astronauts.

‘Taking care’ included organizing the many parades throughout the country after the astronauts had returned from space. Until then, the army had always used Hongqi parade cars for the parties, but they wanted something more ‘Chinese’ for the heroes of the Shenzhou VII mission. The Hongqi after all, was not much more than a rebadged Audi with a Nissan engine.

National pride was indeed at stake here! The Shenzhou VII mission marked the first time that China shot a rocket tipped with 3 astronauts into space and one of those astronauts made China’s first spacewalk. The astronaut, Zhai Zhigang, waved around with a small Chinese flag while ‘walking’ in the endless nothing next to the spacecraft. After that achievement, a China-sized party was called for. The army therefore wanted a truly Chinese vehicle and on they went to Chery Automotive. Chery happily complied by making three Eastar parade cars.

September 29, 2008. The Shenzhou mission was successful and the astronauts had safely returned on earth. After saying ni hao to the wives, it was time for the parades. Pictures are from the parade in Beijing but they paraded in many other cities including Shanghai, Guangzhou, Shenzhen, and even Hong Kong.

Zhai Zhigang in the first car, the other two astronauts are Liu Boming and Jing Haipeng. Note white army plates and the many soldiers around. The Chery-logo was painted in gold.

The moment: September 27, at around 16:43 (0843 GMT), Zhai walked in space for 20 minutes.

More pictures of the Chery Eastar parade car are in the gallery.

Dutchman Tycho de Feyter runs Carnewschina, a blog about cars in China, from Beijing, China. He also collects die-cast models of Chinese cars.

chery-eastar-paradecar-china-1-458x305 Chinas_first_spacewalk chery-eastar-paradecar-china-61-458x291 chery-eastar-paradecar-china-8-458x299 chery-eastar-paradecar-china-7-458x343 chery-eastar-paradecar-china-5-458x343 chery-eastar-paradecar-china-4-458x310 chery-eastar-paradecar-china-3 chery-eastar-paradecar-china-2-458x306 chery-eastar-paradecar-china-1b-458x236 chery-eastar-paradecar-china-1a-458x318 Zemanta Related Posts Thumbnail ]]> 19
Australia Reacts To The Chinese Invasion Sun, 16 Oct 2011 17:55:46 +0000

China’s assault on the auto markets of the west may have been delayed another five years, but Australia is going to be the canary in the coal mine. The first mature Western-style market to see any significant imports of Chinese vehicles, led by the Chery J1, is adapting to a new era of low-cost, low-content cars. And it seems that the Chinese OEMs are right to be waiting for future generations of vehicles, as the J1 seems unlikely to make even the impact that Hyundai’s departed Excel made. One reason: safety. Or lack thereof. Hit the the jump to see what we’re on about.

Not wildly inspiring, is it? On the other hand, it could be worse: after all, Holden’s Barina (a rebadged Daewoo Kalos/Chevy Aveo) got a similar two-star rating back in 2005. So, weak safety scores alone shouldn’t keep the J1 back…

Similarly, the marketing for the new Chery is weak… but not fatally, embarrassingly bad. To wit

But, if we look to South Africa, which has already been exposed to earlier Cherys, the perception of the J1 is something along the lines of the recent crop of Chrysler 200 reviews: still not competitive but a huge improvement. Or, in the words of this reviewer, a “scarily large improvement.”

In short, the J1 seems to represent a step in the development of China’s car industry: better than the rolling jokes of even a few years ago, but still not ready for primetime in the Western markets. And if China makes the most of the next five years of development, the next wave of export-oriented Chinese cars could begin to make the kind of impact we’ve seen from Hyundai over the last several decades. But neither the Koreans nor the Chinese will enjoy the opportunity afforded the Japanese, which came into the US just as Detroit’s automakers were fatally losing their way in a rapidly-changing market. If China’s going to make good on the angst it inspires in the Western automakers, it’s going to have to earn it vehicle by vehicle, generation by generation. This is only the beginning.

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Muller’s Maalox Moment: China Turns Down Subaru Sun, 02 Oct 2011 14:44:15 +0000

What looks like a Chinese-Japanese matter should cause considerable heartburn in Sweden and the Netherlands: The Chinese government has informed Fuji Heavy Industries Ltd. that it will not approve the automaker’s application to set up a joint venture in China, says Japan’s Yomiuri Shimbun. Let’s take a closer look.

Fuji Heavy, manufacturer of Subaru cars, had no manufacture in China. Rather belatedly, it negotiated a joint venture with China’s Chery. These joint ventures require government approval, so in May, the necessary papers were filed with China’s National Development and Reform Commission. The application called for a plant near China’s port city of Dalian. The intended annual capacity of that plant was 150,000 units by 2015. Local and regional authorities usually would fall over themselves to attract such an investment.

China’s central government did not want it. According to the Yomiuri, Fuji Heavy was told the application was denied because Subaru “is an affiliate of Toyota Motor Corp.”  Toyota already has two joint ventures in China, and a company can’t have more.

This is widely seen as a face-saving pretext. Toyota has a 16.5 percent stake in Fuji Heavy. If someone would draw a map of cross-holdings in the Japanese auto industry, the Tokyo subway map would look like a Mark Rothko painting in comparison. Says the Yomiuri:

“Observers suspect that China’s growing concern regarding overproduction of cars amid its economic slowdown is behind the latest move. To avert the problem, the Chinese government intends to expedite introduction of state-of-the-art technologies, such as hybrid cars and electric vehicles, they said.”

“Some observers believe the latest case indicates that Japanese firms’ entry into the Chinese market is at a crossroads.”

The complete Chinese car industry is at a crossroads. The explosive growth of China’s car market has made way to single digit growth rates. This is not unusual for China. Instead going through the boom and bust cycles of developed markets, China goes through cycles of big booms and single-digit boomlets.

The Chinese car industry is largely a foreign car industry. According to the China Association of Automobile Manufacturers (CAAM), the market share of homegrown passenger vehicles is on the decline and down to 37.2 percent. Most of the large joint ventures are in the hands of the central or regional governments.

Take SAIC as a for instance. SAIC produced 3.6 million cars last year. Only 346,525 of those were SAIC’s own. Some 3.3 million mostly raised the volume and income of GM and Volkswagen.

The large joint ventures are busy adding capacity in China as demand cools down.  China’s government finds itself aligned with the interests of the world’s major automakers. When push comes to shove, SAIC (Volkswagen, GM), FAW (Volkswagen, Toyota, GM), Dongfeng (Honda, Kia, Nissan, PSA), Chang’an (Ford, Mazda, Suzuki, PSA), BAIC (Daimler, Hyundai), or Guangzhou Auto (Toyota, Honda) are closer to the hearts of the Chinese government than their own smaller independent (or semi-independent) Chinese automakers.  The heavily fractionalized Chinese car industry must consolidate, the government had demanded that for years. The wish from above was largely ignored.  What  the regulators don’t want is new brands and more capacity outside of China’s state-owned sphere. Actually, they wouldn’t mind a little shake-out that increases the volume at the top.

And why should that give Saab heartburns? Saab is under creditor protection. It hopes every day that the NDRC will allow a joint venture with China’s Youngman and car dealer chain Pangda.  If a deal between Fuji Heavy and Chery (# 21 and #22 on the list of the world’s largest automakers) has been denied, how do you rate the chances of two companies that aren’t even on that list? If it took the NDRC since May to find out that Toyota has a 16.5 percent stake in Fuji Heavy, how long will it take the NDRC to decide that the Youngman application hasn’t been properly filed, and please submit a new one? If China doesn’t want a 150,000 units Subaru factory, do you think it wants a Saab that is on Swedish life support?

China will take whatever state-of-the art technologies  – when they are cheap in a bankruptcy sale. BAIC will be happy to buy it at scrap value. Meanwhile in Sweden, the Saab faithful celebrate Octoberfest. With live Internet-hookup to China …


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Shanghai Auto Show: Chery Gets The Girls Thu, 21 Apr 2011 19:37:45 +0000

Chery doesn’t have much new stuff in its booth this year.

There is a QQme covered in rosepetals and the usual assortment of not-quite-ready-for-market electric prototypes every Chinese company fields. But Chery trumps every other car manufacturer at the Shanghai show in one respect: Women.

When I walked by their booth, I was impressed. 30 at least, up against the wall. China’s finest establishments do not have this variety of beauties.

When they trooped off stage  (exit left AND right) …

they were going …

and going …

and going …

and going …


… until the last stragglerette was gone.

I wish they had that many new cars! (That blue car on stage? I have no idea what it was.)

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China’s Chery At The Gates Of The EU Sun, 07 Nov 2010 08:28:40 +0000

The feared Chinese car exports so far have been a dud. The value of car imports beats exports 3:1. This doesn’t dissuade privately owned Chinese carmakers from trying. They are active at the soft underbelly of the world, in developing or emerging markets of South America and Africa. Now, they are getting a bit closer to Europe.

China’s Chery cooperates with Turkish automaker Mermerler Otomotiv to build a Chery plant in Turkey. When finished, the plant will build Chery’s A3/Niche and Change sedans as well as a small SUV, most likely a version of the Tiggo, Gasgoo reports. The plant will have an initial capacity of 20,000 units per year, by 2017, capacity should be ramped up to 100,000 units per year.

The plant is will be in Turkey’s Sakarya Province, not too far from Istanbul. That puts it close to the EU, but not into the EU. Turkey has been trying for long to be a member, but Brussels is more interested to take in powerhouses such as Bulgaria and Rumania, and gives Turkey the cold shoulder.

Because Turkey is not subject to stringent EU rules, and because Turks like a deal, Chery has enjoyed brisk demand in Turkey.

This is Chery’s second attempt to get a foothold in Europe. Chery had plans to acquire the Polish Fabryka Samochodow Osobowych (FSO) factory, which is currently owned by Ukrainian corporation Ukravto. Nothing came of these plans so far. Poland is in the EU.

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Made In China Jags And Land Rovers Tue, 26 Oct 2010 18:21:48 +0000

Rumors of  Tata’s Jaguar Land Rover (JLR) establishing production in China have been around for a while. With good reason, Jaguars and especially Land Rovers enjoy (fairly) brisk sales in China. Now, these rumors move into the realm of the definitive.

JLR is in talks with China’s largest independent automaker, Chery, for a Chinese joint venture reports Beijing Morning Post today (via Gasgoo.) Apparently, there is more to it than the usual Chinese rumors.

Scott Dicken, general manager of Land Rover China, confirmed they are in talks. Chery chairman Yin Tongyue likewise corroborated that both sides are negotiating.

On Saturday, Tata Motors’ CEO Carl-Peter Forster had said that JLR wants to find a partner in China “as soon as possible.” He did not mention candidates.

In 2009, JLR China reported sales of 11,547 units. This figure had already been eclipsed in mid-July 2010. Chery, maker of the QQ, also could use some of JLR’s halo.

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Chery To Pop? Sat, 25 Sep 2010 17:38:43 +0000

China’s Chery is one of the few big car companies that is not wedded to a foreigner. All the big ones are in bed with one or more Western (or Eastern) manufacturer.  Finally,  it looks like Chery might be losing its virginity.

Yin Tongyue, Chairman and General Manger of Chery, was asked about his feelings towards foreign carmakers. His answer:  As long as both partners can achieve a mutually beneficial win-win cooperation, Chery is open to it, but only if Chery can enhance its own technical capability through the collaboration. In short. “Yes.”

So who might it be? Chery has been playing footsie with Tata, but the chairman called that “common communication between companies.” What about a joint venture? “We neither pursuit nor reject for the moment,” said the Chairman. Translation again: “Yes.”

“Chery is looking forward to learning from all the companies, as well as close communication with some international automaker.” Translation: “Yes, yes, yes, yeeeeeees!”

Gasgoo reports that talks with JLR have reached an impasse. Chery has also talked with Fiat, Chrysler and other foreign automakers about establishing joint ventures in China, but all came to nothing for various reasons. Soon, we are running out of suitable beaus.

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Chery Will Build Them In Brazil Wed, 15 Sep 2010 13:08:20 +0000

After testing the Brazilian waters with imported models, and after having received a passing (-by) grade from our man in Brazil, China’s Chery decided to go whole hog and build Cherys in the land of  Samba.  Chery has signed an agreement with the municipality of Jacareí, a city in the interior of the Brazilian state of Sao Paulo, to set up a car assembly factory in Brazil, reports Macauhub.

The plant will cost them $1m. That’s cheap for a car factory, and it smells like small scaled CKD.  Giveaway: Chery wants to sell only 25,000 vehicles in Brazil by 2011. Not enough for full scale production. They have been in Brazil since 2009 . They have 40 dealers so far that sell three models: The Tiggo , the Face and the Cielo (which Marcelo spotted after a long search.)

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The Chinese Are Coming –To Brazil Mon, 23 Aug 2010 06:48:33 +0000

China’s Chery started selling cars in Brazil last year. They were shipped from a Chery factory in Uruguay. The Brazilians like the cars so much, especially the TIGGO SUV, that Chery decided to drop $700m on the Brazilian market, and to have an assembly plant up and running in Sao Paulo by 2013.

According to The Nikkei [sub], the annual output of the plant is estimated at 170,000 vehicles. Not a bad start for a country that consumes 4m cars in a good year and more than 3m in a bad year. Everybody is betting that this number will increase sharply, and for not completely transparent reasons, car sales are expected to explode before the 2016 Olympics, which will be hosted by Rio de Janeiro.

Other Chinese carmakers, such as Changan and BYD, “are also bolstering their Brazilian operations,” says the Nikkei without going into specifics.

In five years, sales of Chinese cars in Brazil are projected to total 200,000 units, or 5 percent of Brazil’s market. That Chery factory could make most of them by 2013. Someone must be bluffing or low-balling.

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Chery To Manufacture QQ In Poland? Sat, 10 Jul 2010 12:24:22 +0000

The Tata Nano still hasn’t caught up with its hype and is, 2 years after its introduction, still battling problems of mass production and spontaneous combustion. Meanwhile, in China, Chery is stamping out its low cost QQ by the hundreds of thousands. The QQ is inseparable from China’s popular culture.

Now, QQ could be thinking of entering Europe through its eastern backdoor Poland. Chery Auto is planning to acquire Polish automaker Fabryka Samochodow Oso-bouch (FSO) to locally produce its QQ in Poland, says Gasgoo.

FSO is better know as the former manufacturer of Polski Fiat (1965-1991) and its partnership with Daewoo. That led to some flirtations with GM . After Daewoo went bankrupt, FSO was back on its own. Ever since, FSO went further down the drain.

Here is another company the Chinese could pick up for cheap. Coincidentally, there is another company that had (until quite recently) GM connections.

Chery has factories in Russia, Ukraine, Iran, Egypt, Indonesia, Uruguay and Malaysia. One in Europe is missing in their collection.

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The Chinese Have Landed In Brazil! Can They Samba? Thu, 03 Jun 2010 20:34:54 +0000

Chinese cars were rumored of having arrived a long time ago here in Brazil. They’ve been talked about for years. Dealerships were rumored to be opening up right and left. Like in other markets, it was a Chinese chimera.  Granted, you could spot a smattering of vans, or maybe a light delivery truck, parked or puttering along here in Brazil, but again, when you took a longer look, more often than not, you’d see that what you thought were the long-rumored Chinese cars was actually a Hyundai or Kia product, mistake as a Chinese. You know, those Asians, they all look alike.

They are here now. By God, I have proof! I swear that when I saw it I was so shocked I took a picture.

Look behind the steel curtain. Can you identify the car on the right? For Brazilians, identifying the car on the left is easy. Maybe it’s a little difficult for our American friends. The one on the left though is a different story. Would our own Bertel Schmitt see it? [There is a magnifying function – ED]

That’s right. It’s Chinese. It’s a Chery. A Chery Cielo, in fact. Nice to meet you. Had never seen you from this butt angle. Think you look alright, contemporary. I see now that Pininfarina’s work on you was not in vain. Sorry I’m so surprised, but you don’t look so Chinese. And you’ve found a nice house, and have a nice garage mate. Who drives you? The house looks like it belongs to a doctor/engineer/lawyer. It’s definitely not some yahoo’s abode. So, what have you got to seduce a supposedly well-informed, not to mention well-heeled, daddy?

Well according to Brazilian enthusiast site, first and foremost, it’s price. Here, the Chery Cielo retails for Brazilian R$41,900 (R$1.80=US$1) or US$23,270. That’s the price of top-of-the-line subcompacts (to you Americans) or compacts (for Brazilian and European customers) like Fiat Palios and Sienas, VW Gols and Voyages, Chevy Corsas and Ford Fiestas. Or a little less than compact (again to you Americans, for us Brazilian and to Europeans the following are medium-compact-sized cars) Chevy Astras, Ford Focuses, VW Golfs and Fiat Stilos. Or supposedly premium compacts like Fiat Puntos or VeeDub’s Polo.

In terms of size, the Cielo, lands in right in the middle. The Cielo is bigger than the smaller cars, but not as big as the larger ones. As to style, as mentioned above, the Cielo has a you-can’t-quite-put-your-finger-on-it Euro vibe. But it’s very subdued. Elements seem to be borrowed from different Euro-brands. Like the VW snout, or the Audi-esque backlights. Inside, the blandness is greater. The radio buttons particularly look and feel like they were taken from a playmobil. Not good, but again, in this market, not that bad either.

On the dynamic front, Brazilian website says that there are problems. The car is just too heavy (1,375kg in sedan form) for its 1.6L engine. The engine produces a healthy 119 hp and is made jointly by Chery and the Austrian engineering company AVL. Nonetheless,  not enough for the heft. The Cielo feels slow. Is this evidence of sloppy engineering? Or is that my preconceptions talking? So, I’d imagine performance is not the reason why the car behind the curtain was bought.

The Cielo is not only heavy, it is heavily loaded. Counter-intuitive for what we expect from a supposedly frugal Chinese car. According to Brazilian site, there is power steering, power windows, side mirrors, A/C, radio, ABS and some other goodies that much too often must be bought as pricey extras with other competitors.

A similar car comes to mind. The Renault Logan costs about the same in top-of-the-line form. And is similarly equipped. And is bigger inside than the Cielo, and arguably better finished. The Logan performs better as it weighs just 1.040kg, according to As evidenced by the other car in the garage, the Cielo owner is not Renault-adverse. So why?

That will be the question faced by every potential Chinese car buyer in Brazil. There will be different answers, but as evidenced by this car, the Chinese are not coming here based on price alone. I think what motivated our friend, the first ever Brazilian Chinese/Chery owner I’ve ever seen, is a mix of price, style and content. Whether he’ll see any of his money back come resale time remains to be seen. Whether he’ll get good service during the life of his car is an open question, depending on the long term success of the Chery. One thing must be said: Behind that steel fence lives one courageous guy.

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Chinese Confusion: Riich Or Cheap? Tue, 18 May 2010 10:57:30 +0000

You think U.S. car makers suffer from brand confusion? Come to China! China’s Chery for instance is known for their low-cost cars, especially for their ubiquitous el cheapo QQ. In order to venture into more upscale segments, Chery launched a number of brands, amongst them Rely (for SUVs, get it?), Karry (for minivans and pick-ups, get it?) and Riich (for upscale models, get it?) Now, the confusion starts.

Chery is about to launch the Riich M2, which “could be one of China’s cheapest cars,” if China Car Times is not mistaken. It’s a two-seater city car (shades of that German brand confusion called Smart). It looks like a “honey, I shrunk the Chery QQ3 and gave it a Riich badge.” An all-electric version is in the realm of the possibility. A pluggable prototype was on display at the Beijing Auto Show. The future price of the Riich M2 is unknown. But the two-seater has to duke it out with the likes of the five door, Aygo-inspired, BYD F0 that starts at 34,000RMB ($4,900), or with Chang’an’s bestselling Ben Ben Mini that can be had for only 29,000RMB ($4,200.) Before the customary steep discounts. They all seat at least four. More in a pinch. Those low-budget midget-mobiles haven’t received the fawning media accolades like the Nano, but unlike the Nano, they are being stamped out and sold by the hundreds of thousands each.

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China’s Chery Picks Better Place. Possibly Wed, 28 Apr 2010 05:54:50 +0000

Shai Agassi’s Better Place possibly clinched a possibly better deal than having three taxis running around in Tokyo. Possibly.

According to the Financial Times, Better Place signed a memorandum of understanding with China’s Chery “to develop prototypes for electric vehicles to be used in regional sate-sponsored pilot projects.” This could give Better Place access to what the FT calls “potentially the biggest future market for battery-powered cars.”

The system remains the same: switchable batteries that will be swapped at charging stations faster than you can swap-in the extra battery of your camera. If you can find it. Israel and Denmark are running tests. But these are tiny countries, and this is China.

In this market, wide acceptance of a system, any system, is everything. Remember Blue Ray against HD DVD, or, if you are my age, Betamax against VHS. You don’t want to end up as a Betamax.

So far, Better Place has two car companies signed up, Renault and Chery. The latter is kind of signed up, MOUs are a dime a dozen, it’s the real deal that counts. According to the FT, Shai Agassi, is “in heavy talks with some of the global carmakers about our model.” He better get going.

For battery powered vehicles, there is no Better Place than China. The government is pushing heavily. Chinese are at the forefront of battery and EV development. China’s Science and Technology minister Wan Gang is a former Audi engineer and an electric car expert.

As far as infrastructure projects go that take forever in other countries, China is paradise: If they want an infrastructure, the Chinese will have one. Literally over night. To wit: Even before the  M.O.U. was signed,  Chery put a Better Place ready Riich G-5 sedan on display at the Beijing Auto Show.

However, Chery is a private auto maker. State-owned joint ventures, such as the one between SAIC and GM, push their own infrastructure projects, together with their governmental owners. Many cities, such as Shanghai, Shenzhen and Wuhan, have their own charging station projects. By the end of the year, 75 electric vehicle charging stations are planned in 27 cities across China, says China’s State Grid Corporation, according to China Daily. Now guess who will get the thumbs up, in say, Shanghai? Better Place from Palo Alto and Chery from Wuhu? Or China’s State Grid Corporation and the likes of the Shanghai Automotive Industry Corporation? Guess.

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It’s A Spark! It’s A QQ! No, It’s A Prince! Tue, 30 Mar 2010 14:49:46 +0000

While India is still waiting (and waiting, and waiting) for volume production of their ballyhooed Nano, the cars-for-pygmies segment is in overdrive in neighboring China. It’s hard to keep them apart. When Chery launched the QQ in 2003, taking a bit more than just design cues from the Daewoo Matiz (a.k.a Chevrolet Spark) Car and Driver called the QQ a “carbon copy.” GM called their lawyers. After three years in court, the spat led to nothing, except that Chery can’t sell cars in the US under its own name due to the similarity between “Chery” and “Chevy.” In the meantime, the QQ is a runaway hit in China. Hits attract admirers. There’s a new copy in the house!

At last year’s Shanghai Motor Show, we saw a car that looked just like a carbon copy of the QQ. Being one of the many prototypes shown at the show, we thought “so what,” and moved on to the next booth. Turns out, the carbon copy of the carbon copy will actually go into production.

Made by Haima on the sunny island of Hainan, the production “Prince” will debut at the upcoming Beijing Auto show. According to TheTycho, “the mirrors from the QQ and the Prince are interchangeable and so are the doorhandles and all side panels.” The interchangeability  of these parts seems to have tradition. Back when GM and Chery were at odds, GM executives demonstrated that the doors of the QQ and the Spark are interchangeable without modification.

The engine (47.5kw@5600rpm) also has similar characteristics as that of the QQ. The price of the Prince will be even less princely than the already bargain basement QQ. MSRP will be 35.000 RMB ($5100). With the usual steep discounts, it should go for a little more than $4000.

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